Fed Decision Could Dictate Bitcoin's Trajectory — Market Talk
1013 GMT - The Federal Reserve's policy decision at 1800 GMT is the most important immediate catalyst for bitcoin, Zaye Capital Markets analyst Naeem Aslam says in a note. The Fed is expected to leave interest rates unchanged but the accompanying policy statement and press conference will be particularly important as investors are increasingly focused on whether slowing employment growth and moderating industrial demand justify a more accommodative policy outlook, he says. Any signals about future tightening could strengthen the dollar, push Treasury yields higher and increase selling pressure across cryptocurrencies, he says. Conversely, "guidance indicating greater concern about economic slowing could encourage renewed institutional allocations, improve liquidity expectations and support bitcoin's recovery." Bitcoin rises 0.9% to $81,416, LSEG data show. ([email protected])0916 GMT - The U.K. budget announcement could offer relief to gilts, causing yields to fall, ING's Michiel Tukker says in a note. "We do think a bit of a relief rally could take place as the budget turns out to be more boring than [Prime Minister Andy] Burnham's ambitions would imply," he says. ING expects 10-year gilt yields to edge lower as markets price out government spending suprises, Tukker says. Ten-year gilt yields are last up 2.3 basis points at 5.364%, Tradeweb data show. ([email protected])0910 GMT - The dollar's strength should persist even if Federal Reserve Chairman Kevin Warsh refrains from sending clear signals about further tightening in December at Wednesday's meeting, Commerzbank's Volkmar Baur says in a note. "Rates are likely to remain unchanged tonight, and if Warsh sticks to his usual line, as seems likely, the press conference should contain few, if any, clues about December." However, as long as nothing is said to dampen market expectations for a rate rise in December followed by two increases next year, the dollar is likely to remain firm, he says. The decision is at 1800 GMT. The DXY dollar index rises 0.1% to 102.371 after earlier reaching a two-week high of 102.491.([email protected])0846 GMT - The euro has room to weaken further on French fiscal worries as it hits a 17-month low against the dollar, Danske Bank's Jesper Fjarstedt says in a note. "Markets are starting to doubt the near-term case for European Central Bank rate hikes, which marks a stark shift from September when tomorrow's meeting was priced as a nearly certain hike." Markets expect the ECB to leave rates unchanged Thursday and a December rate-rise is less than 80% certain, he says. Danske still expects a December move but tightening to end then. If correct, markets are pricing the ECB's policy rate around 45 basis points too high in one year's time, he says. The euro falls to as low as $1.1111. ([email protected])0843 GMT - The Bank of Thailand is likely to maintain its policy rate at 1.00% in the near-term, before restarting the easing cycle in 2027, Capital Economics' Jack Piper says in a note. Noting that BOT said overall growth is "below its potential," he adds that the central bank's main concern is the weak economy. Thailand has been hit hard by rising global energy prices and has not benefited from increasing artificial intelligence-related exports to the extent of some Asian economies, it says. CE expects the BOT to hold rates steady through end-2026 and deliver one final 25bp cut, compared to other analysts, who mostly expect rates to remain on hold throughout 2027.([email protected])0836 GMT - Yields on U.K. government bonds, or gilts, advance along with eurozone and U.S. peers as rising oil prices revive inflation concerns. Gilt investors are focused on the U.K. budget due around 1230 GMT and the Debt Management Office's 2026-2027 financing remit which will be released after that. Most analysts expect a cautious budget which should leave gilt markets relatively calm. Meanwhile, The Wall Street Journal reported that the U.S. could be preparing to resume attacks on Iran after the midterm elections due on November 3, raising fears about fresh energy supply disruptions. Brent Crude rises 1.2% to $115.2 a barrel. Ten-year gilt yields rise 2.6 basis points to last trade at 5.367%, Tradeweb data show. ([email protected])0817 GMT - The U.K. budget at 1230 GMT could have a positive impact on sterling and U.K. government bonds, ING's Chris Turner says in a note. The spread between yields in U.K. and German government bonds could narrow, highlighting that the U.K. is one of the few G-7 economies heading in the right fiscal direction into 2027 with forecasts for the budget deficit inside 4% of GDP as higher inflation drags more workers into higher tax brackets, he says. "Barring any surprise budget giveaways that hit gilts, it looks as though euro-sterling can stay heavy and potentially nudge down to the 0.8315 area." The euro rises 0.1% to 0.8370 pounds after hitting a 17-month low of 0.8357 overnight, LSEG data show.([email protected])0804 GMT - Sterling turns modestly lower versus the euro and hits a 12-day low against the dollar as investors look ahead to the U.K. budget and Federal Reserve's decision later. While investors exercise caution ahead of the budget at 1230 GMT, the U.K. government has promised to stick to the fiscal rules. Meanwhile, the Fed is widely anticipated to leave rates unchanged at 1800 GMT but markets will be looking for any signals that support expectations for future tightening. Sterling falls 0.1% to as low as $1.3283. The euro rises 0.1% to 0.8367 pounds, having reached a 17-month low of 0.8357 overnight, LSEG data show. ([email protected])0757 GMT - A fiscal buffer of around 15 billion pounds ($20 billion) should appease investors in U.K. government bonds, or gilts, Ebury's Matthew Ryan says in a note. "Investors will want to see the headroom rebuilt to 15 billion pounds or more, and spending plans that look credible," he says. A shortfall on these could revive fiscal concerns and weigh on gilts and sterling, Ryan says. The fiscal buffer is the amount the government can increase spending or lower taxes without breaking its own fiscal rules. ([email protected])0753 GMT - The euro falls to a 17-month low against the dollar as the U.S. currency strengthens and French fiscal concerns linger. The Federal Reserve is broadly expected to leave rates unchanged in a decision at 1800 GMT but markets price over 70 basis points of tightening over the next year, LSEG data show, supporting the dollar. A rally in oil prices boost the prospect of such tightening. Improved AI sentiment also lifts the dollar. Meanwhile, French debt concerns have raised doubts over the European Central Bank's scope to raise rates further in the near-term ahead of Thursday's meeting. The euro falls to as low as $1.1111. ([email protected])0746 GMT - Investors expect small tax rises at the U.K. budget, likely targeting banks, online retailers and gambling activities, Ebury's Matthew Ryan says in a note. "With capital gains tax seemingly off the table, the immediate hit to growth should be minimal," he says. Markets appear to have priced in a moderate budget statement with minimal policy changes. "All signs point to a cautious budget that leaves the bond vigilantes with little to do," Ryan says. ([email protected])0741 GMT - The dollar rises to a two-week high against a basket of currencies as sentiment towards AI stocks recovers ahead of the Federal Reserve's policy decision at 1800 GMT. AI company Anthropic's initial public offering filing on Monday revived optimism over the sector. Attention now turns to the Fed's decision where markets see a 90% chance that rates will be held steady but price over 70 basis points of tightening over the next year, LSEG data show. "Markets are fully locked into the idea of quarterly hikes with exactly 50 basis points priced in by March, in line with our call," Danske Bank's Jesper Fjarstedt says in a note. The DXY dollar index rises to as high as 102.491. ([email protected])